Peer Review of the Korean Shipbuilding Industry 2026

3. Competitiveness

Abstract

This chapter presents a SWOT analysis of the Korean shipbuilding industry and a comparative assessment with the Japanese maritime sector. It outlines the strengths and weaknesses of the industry, focusing on marine equipment self-sufficiency, workforce demographics, and cost competitiveness. The chapter also identifies external opportunities and threats, including emerging alternative fuel markets and shifting global market shares. Finally, it compares the structural differences between the Japanese and Korean shipbuilding industries.

3.1. Competitiveness of Korea shipbuilding industry

3.1.1. SWOT analysis

The competitiveness of the Korean shipbuilding sector is shaped by a mix of structural strengths, persistent challenges, and emerging opportunities.

Table 3.1 provides a SWOT analysis of the industry, summarising insights from the report’s analysis on the wider maritime sector, the shipbuilding industry structure and key market trends.

3.1.2. Strengths

The Korean shipbuilding industry maintains a solid competitive position in high value-added vessel segments, including LNG carriers, ultra-large container ships, and very large crude carriers (VLCCs). Its advantages stem from strong R&D and design capabilities, supported by experience across a wide range of ship types, and from production efficiency achieved through large-scale facilities and systemized processes. As of 2024, Korea accounts for over 65% of global LNG carrier orders and has a clear technical edge over China and Japan in cryogenic cargo containment and high-efficiency propulsion systems. These factors contribute to the strong reputation of Korean shipyards among international shipowners.

Korea also benefits from a well-developed ship finance framework centred on the Export-Import Bank of Korea (KEXIM) and the Korea Trade Insurance Corporation (K-SURE). These institutions provide integrated financial, guarantee, and insurance support, improving access to project financing and reducing risk exposure, particularly for large-scale and long-term projects such as LNG carriers and offshore facilities.

The industry is further supported by an integrated cluster built around the three major shipbuilding groups—HD Hyundai, Samsung Heavy Industries, and Hanwha Ocean—which link shipyards, design firms, and research institutes. This structure enables process standardisation, supply chain stability, and efficient use of skilled labour and technology.

The Korean shipbuilding industry is promoting and strengthening the R&D activities through the benefits from strong government policies, ‘K-Shipbuilding Strategy’ and ‘K-Shipbuilding Super Gap Vision 2040’, and financial support, bearing in mind of the IMO GHG strategy. Specialising in high-value vessels such as LNG carriers and ultra-large container ships, the shipbuilding industry is developing alternative fuel vessels aligned with the IMO GHG Strategy. Productivity improvements through digitalisation and automation are ongoing, while a consistent though limited domestic demand for new ships is supported by an established domestic supply chain of maritime equipment and the steel industry, reinforcing global competitiveness.

3.1.3. Weaknesses

The main challenge is a chronic labour shortage of skilled workers and young talents, leading to reliance on foreign labour to a certain extent, although sustained efforts are being made to cultivate domestic technical talent and gradually expand the domestic workforce. The workforce declined by 44% between 2014 and 2024, and skilled workers accounted for only 28% of the workforce in 2023. To mitigate these labour constraints, major shipbuilders have recruited foreign workers, who now represent approximately 15% of total employment.

Overconcentration in specific areas like offshore, LNG carriers, and ultra-large container ships raises risks in terms of concentrated investment. This strategy strengthens the competitiveness in specific ship types, yet the industry is exposed to a downturn trend risk when the specific sectors face in a recession.

3.1.4. Opportunities

The growing demand for alternative fuel-capable vessels in accordance with the IMO Strategy and regulations creates new opportunities for shipbuilding and new market potential. The new financial incentive, such as sustainable transition funds, encourages shipowners to invest in alternative fuel vessels.

The Korean shipbuilding companies are expanding overseas through M&A and partnerships with overseas shipbuilding companies, which is expected to increase order opportunities and strengthen their competitiveness.

3.1.5. Threats

China’s rapid rise has pushed its global orderbook share to around 69% in 2024, leaving Korea with only about 16%.

The significant threats include intense competition for skilled and foreign workers across industries and other countries, in addition to the rapid technological progresses in competing countries, in particular China. Moreover, there is a threat that the existing high-value and low-emission ship technologies would become obsolete.

The volatile shipping market, shifting demand, and a possible downturn in green activities could further threaten the continuous development of the shipbuilding industry. In addition, geopolitical risks—such as tightening procurement rules linked to national security and potential trade restrictions—pose additional uncertainties for Korea’s export-oriented segment, potentially limiting market access even in areas of technological strength.

Box 3.1. Comparative Analysis of Korea and Japan in the Shipbuilding Industry

Common point

Firstly, both economies are increasing their investment in future maritime technologies. Secondly, the lack of workforce and the rise in raw material prices appear to be weaknesses for both economies.

Difference point

Firstly, Korea has a relatively low level of domestic ship and marine equipment demand, which is a big difference from Japan. Around 15-25% of ships built in Korea are delivered to Korean ship owners. The marine equipment for eco-technology components relies heavily on imports. Secondly, Korea tends to address trends such as decarbonisation and digitalisation at the level of shipyards, especially large ones, while Japan is implementing a consortium strategy involving various stakeholders such as shipping companies and shipbuilders.

Table 3.1. SWOT analysis of the Korea shipbuilding industry

Strengths	Weaknesses
Strong government policies and government financial support for the shipbuilding industry and R&D Retention of the shipbuilding capacity to maintain the global share Specialising in the high-value ship building such as LNG carrier, ultra-large container ship and naval sector Developing alternative fuel vessels in line with IMO Net-Zero framework Public-private partnership to support capital expenditures for new technology development. (From 2019 to 2023, the Korean government invested 0.9 trillion KRW and the private companies invested 1.2 trillion KRW on R&D) Public-private partnership to support capital expenditures for new technology development. (From 2019 to 2023, the Korean government invested 0.9 trillion KRW and the private companies invested 1.2 trillion KRW on R&D) Strengthening shipbuilding productivity through the development of digitalisation and automation in the design and building process Consistent demand for domestic shipping companies, albeit limited Establishment of the domestic supply chain of maritime equipment and the steel industry for the shipbuilder.	Chronic shortage of skilled workers and young talent Reliance on foreign workforce (accounting for 15% in the major shipbuilders) Excessive investment and over-reliance on specific areas, such as offshore, LNG carrier, and container sectors Reliance on imports of a part of the energy-saving maritime equipment and maritime equipment Loss of resources through internal competition with domestic builders on R&D and order activity through a lack of collaboration Overdependence on global demand (exports).
Opportunities	Threats
Demand for alternative fuel vessels to comply with the IMO regulations Growing R&D in hydrogen and ammonia fuel designs Extensive IP base Expanding order opportunities and strengthening competitiveness though overseas expansion Expanding overseas procurement of the naval sector by foreign governments Benefit of financial incentives on capital investment and overseas expansion from foreign governments, and the derivative of financing sources to shipowners.	China’s rapid ascent: ~69% of global orderbook in 2024, dominating volume and increasingly advanced segments / Korea’s dominance in LNG, LPG, and offshore vessels Obsolescence of existing technology on high-value ship and low emission ship such as LNG carrier Rapid technological development in competitive countries, in particular China Deterioration and high volatility in the shipping market and changes in market trends Slowdown in patent activity post-2022 Geopolitical risks /Tightening procurement regulations on shipowners by the government, considering national security concerns.

Source: OECD authors’ elaboration.